Question

Describe at least two factors that a lender would consider if you applied for a business loan.

Answer 1

History: A lender would consider the applier's loan history to see when they usually pay back, if they pay back, etc.

The business itself: If the business was selling hot dogs to aliens, the business wouldn't make much money. They would see if there was a chance that they would be able to pay back the loan.

That help?

Answer 2

No

Answer 3

My business is an Art shop I want to open one day.

Answer 4

Your personal and business credit history (Your payment history on your current debt)

Income (Can you document the ability to repay the loan request)

Collateral (What assets can you pledge to secure the loan?)

Answer 5

Collateral: I wrote down house and car because if you own both of them then that's a collateral.

Answer 6

And about the income?

Answer 7

I don't know my income yet.

Answer 8

What about credit history?

Answer 9

I don't have one.

Answer 10

Management Guarantees

The bank will probably require personal guarantees from each owner of the company, assuming that it is a closely held business with only several owners. Usually, each owner completes a personal financial statement on a form provided by the bank. The standard procedure is for the bank to review the personal statements and then, when the loan is approved, have each owner execute a guarantee. In addition to providing additional security, the personal guarantees assure the bank that the owners will probably remain with the business while the loan is in force.

Answer 11

Ok can you help me with just 2 more questions please?

Answer 12

Sure.

Answer 13

Describe at least one way in which a line of credit is different from a loan.

Answer 14

And the second question is the same except that instead of loan it's credit card.

Answer 15

A home equity loan is often used for large one-time expenses, like big home-improvement projects.

A home equity line of credit can be used for one-time expenses, like a kitchen or bath remodel, or those that may occur over a period of time, like ongoing home improvements, tuition, or other emergency expenses.

Answer 16

Thank you so much.

Answer 17

No problem.

Answer 18

"Key differences are obvious when it comes to the advantages each offer. Since most merchants accept both MasterCard and Visa, users of credit cards reap the the benefit of not having to bring checks or cash with them when shopping. The main advantage to a line of credit is their interest rates. They are typically lower than those associated with credit cards." - http://www.choicepersonalloans.com/lineofcredit/lineofcreditvscreditcard.htm